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He FTSE and its components are famous for some surprisingly low valuations. And given the recent declines in the stock market, certain stocks have become even cheaper. So here are three cheap stocks with valuations currently trading near decade lows that I’ll buy in April.
1.Taylor Wimpey
Sky-high inflation, the mini-budget crisis, and sky-high mortgage rates have caused the housing market to cool significantly over the past year. Consequently, the stocks of homebuilders have suffered, and taylor wimpey (LSE:TW) stocks have been no exception.
That being said, the stock has rallied remarkably from its September lows, jumping 35%. Even so, the shares remain reasonably cheap as builder valuation multiples are below historical averages.
| Metrics | taylor wimpey | industrial average |
|---|---|---|
| Price-to-book (P/B) ratio | 0.9 | 0.9 |
| Price-Sales Ratio (P/S) | 0.9 | 0.8 |
| Price-Earnings Ratio (P/E) | 6.3 | 9.8 |
| Forward price-to-sales ratio (FP/S) | 1.2 | 1.2 |
| Forward price-earnings (FP/E) ratio | 12.8 | 10.4 |
With the headwinds in the real estate market beginning to ease as well, now could be a good time to build my position. Also, house prices are not falling as much as initially anticipated. As long as this trend continues, the developer may even see a surprise in earnings.
Plus, Taylor Wimpey has an immaculate balance sheet, with a sublime debt-to-equity ratio of 2%. Combine that with their asset-based dividend policy and 8% dividend yield, and I don’t see why you shouldn’t buy more shares at these low prices.
2.Barclays
the next is barclays (LSE:BARC). The hybrid retail and investment bank has been caught up in the recent banking crisis. Thus, the bank has seen its initial rally earlier this year reversed in recent months.
But as Warren Buffett once said, “be greedy when others are fearful”. And given Barclays’ cheap valuation, I think the risk-reward proposition is certainly attractive.
| Metrics | barclays | industrial average |
|---|---|---|
| Price-to-book (P/B) ratio | 0.3 | 0.7 |
| Price-Earnings Ratio (P/E) | 4.3 | 9.0 |
| Forward price-earnings (FP/E) ratio | 4.5 | 5.6 |
That being said, investing in banks can be a risky business given their business model. However, Blue Eagle Bank’s low-risk deposit base puts it in a strong position to protect itself from turmoil. That’s because a large number of their deposits are insured, making a run on the bank less likely.
So I think Barclays shares are very cheap at these prices. This may be supported by his £2.40 average price target, meaning buying the shares today could present me with a potential gain of over 70%, and last time I checked, Barclays is not a growth stock.
3. Marks and Spencer
Finally, a personal favorite of mine, marks and spencer (LSE: MKS). Although analysts were quick to write off the stock when inflation began to rear its head, the retailer has remained resilient throughout.
As such, those who heard the “sell” calls from brokers may be regretting their decision, as M&S shares are up nearly 75% from their October lows.
Despite the sharp rise, the stock remains surprisingly cheap, with all of its multiples remaining comfortably below the industry average. And when considering the tremendous growth prospects that lie ahead for the FTSE 250 Unconditional, it’s a scream buy for me.
| Metrics | marks and spencer | industrial average |
|---|---|---|
| Price-to-book (P/B) ratio | 1.0 | 1.4 |
| Price-Sales Ratio (P/S) | 0.3 | 0.3 |
| Price-Earnings Ratio (P/E) | 10.0 | 13.6 |
| Forward price-to-sales ratio (FP/S) | 0.3 | 0.5 |
| Forward price-earnings (FP/E) ratio | 10.5 | 12.9 |
A combination of fancier stores, a vastly improved clothing line, an improved omnichannel experience, strong financials, and a potential dividend return has me beyond excited. After all, these improvements have begun to show in the firm’s latest Christmas update that boasted record sales.
With increased foot traffic, growing market share in food and clothing, and increased purchase frequency despite the cost-of-living crisis, I think adding Marks and Spencer stock to my basket in April is one of the best investment decisions I can make.
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